U.S consumers are billions behind on their utility bills and, according to the U.S. Energy Information Administration, there is no relief in sight, as electricity prices are expected to continue rising this year and next.
The agency released its October Short-Term Energy Outlook on Wednesday, forecasting the U.S. residential price of electricity will average $0.1486/ kWh this year, up 8% from 2021. That’s also up from EIA’s September report, which predicted residential prices would average $0.1475/kWh this year.
For 2023, EIA anticipates retail electricity prices will average $0.1532/kWh – ticking up from its $0.1524/kWh forecast a month ago.
“Higher retail electricity prices largely reflect an increase in wholesale power prices, which are driven by higher natural gas prices,” the agency said.
Higher gas prices are a result of several factors, experts say, including inflation and the war in Ukraine increasing international competition for U.S. exports of liquefied natural gas. Consumer advocates warn growing numbers of consumers cannot afford their utility bills.
“Millions of lower-income families will be facing unaffordable home energy prices this winter,” National Energy Assistance Directors Association Executive Director Mark Wolfe said in an email. “I’m concerned that for those living solely on Social Security,” he added, and that even with an inflation adjustment it “will not be sufficient to cover the increase in home energy costs this winter.”
NEADA represents state directors of the federal government’s Low Income Home Energy Assistance Program. The group said last month that home heating costs this winter will reach their highest level in a decade, rising 17.2% above last winter and about 35% from two years. The figures include customers heating homes with natural gas, propane, electricity and heating oil.
The group’s data also shows U.S. families are falling further behind on electric and gas utility bills. Arrearages rose to $16 billion in August, roughly doubling since the end of 2019.
Electricity sales will rise 2.7% this year, EIA estimated, “mostly because of more economic activity but also because of slightly hotter summer weather than last year. We forecast U.S. sales of electricity to fall by 0.9% in 2023.”
The price on a retail customer’s bill is driven by wholesale markets, said EIA, and it forecast prices at major power trading hubs “will be about 20-60% higher on average this winter.”
“The highest wholesale electricity prices are likely to be in New England because of possible natural gas pipeline constraints, reduced fuel inventories for power generation, and uncertainty regarding liquefied natural gas shipments given the tight global supply conditions,” the agency said.